Shares of newly listed technology companies plummeted on Monday in tandem with the broad-based sell-off in the domestic and international markets, ahead of the two-day US Federal Reserve meet.
Zomato, the food delivery major, fell more than 25% over five trading sessions. On Monday, the stock closed at Rs 91.40 on the BSE, down 19.65%. Shares of FSN E-Commerce Ventures (Nykaa), One97 Communications (Paytm), and PB Fintech (Policybazaar) also ended lower by 12%, 4%, and 10%, respectively.
The overall sentiment has turned negative for markets across the globe amid the Federal Reserve’s policy tightening. Investors are squaring off their holdings from growth stocks or new-age businesses, especially the loss-making ones, after these companies listed at hefty valuations during their initial public offerings (IPOs), said analysts.
“The trend in global stock markets has turned distinctly bearish. Last week S&P 500 and Nasdaq closed 8% and 15% below their all-time highs. The sell-off in tech stocks has been brutal last week. European stocks too turned bearish. An important feature of the tech sell-off is that bulk of the selling is happening in non-profitable tech stocks. This trend is impacting stocks like Zomato and Paytm in India too,” said VK Vijayakumar, chief investment strategist at Geojit Financial Services.
The BSE Sensex ended 1,545.67 points or 2.6% lower at 57,491.51, and the Nifty-50 declined 468.05 points or 2.6% to close at 17,149.10 on Monday. The BSE IPO index, which constitutes of recently listed stocks, fell 7% or 830 points to end at 11,036.50.
India’s economic growth will continue to be promising, however, Indian traders will also witness pressure from the sell-offs in the foreign markets, said experts.
“Markets are under pressure due to sharp drop in values of cryptocurrencies and also the NASDAQ listed ‘new-age’ stocks. Though India’s economy and growth are full of promise and potential, traders may face the brunt of sell-offs, largely due to the collateral damage of erosion in values of crypto and new-age stocks, said Deven Choksey, managing director, KR Choksey Investment Managers.
Going forward, the profitability of some of these companies and their potential to grow their businesses in the coming years will remain a key factor for investors to watch, analysts said.